What Does a Logistics Service Provider Do?
A logistics service provider manages a business’s incoming and outgoing products, helping them stay ahead of the competition. They work at the regional and international level, providing a comprehensive range of services.
Most LSPs will handle customer invoicing and payment receipts. They can also ensure that payments match original purchase orders and shipping confirmations.
Warehouses are the hub of your supply chain, holding all your goods in transit before being shipped to customers. Warehousing services include picking, packing, weighing, printing labels and selecting the best courier service for each shipment. They also manage inventory levels, matching incoming raw materials with original purchase orders so each factory has exactly what it needs and no extra supplies are held up in the system. They also manage seasonal or flash sales peaks, keeping stock at the right levels to ensure there’s always enough for each order and alerting you to any issues as soon as they happen.
For businesses looking to expand into new regional markets or with a wide customer base, warehouses can be key in reducing shipping costs. Many 3PLs (third-party logistics providers) store multiple companies’ products in the same warehouse, known as multi-tenancy, cutting down on overheads for warehouse rent and upkeep. They also have industry networks to help negotiate bulk discounts on freight and warehousing, freeing up funds for other financial needs like growth or managerial investments.
A logistics service provider handles the incoming flow of raw materials, components and finished goods into a company’s production process. This includes materials purchasing, receiving, freight forwarding and reverse logistics. Inbound logistics also involves balancing supply and demand through inventory optimization.
Some specialized logistics services include picking, packing and shipping customer orders. Others involve delivering goods to customers and tracking returns. Logistics service providers Logistics service provider can help with a wide range of shipping options for trucks, trains and ships. These multimodal transportation options can save money and time while optimizing delivery speed and flexibility.
Truckload shipping requires the expertise to manage capacity and route options on a daily basis and over the long-term. A logistics service provider has the resources, experience and technology to optimize a shipper’s truckload operations. These may include using transport management systems, electronic data interchange (EDI), and real-time tracking and monitoring solutions.
Many ecommerce brands start out handling their own fulfillment and shipping operations but realize that it’s not feasible to scale these tasks as the company grows. This is especially true of businesses with limited storage space or high shipping costs that take a chunk out of profits.
Logistics service providers offer a full range of inventory management services. For example, they may help companies determine which items should be grouped together in orders and arrange them to ship them efficiently and quickly. This helps to cut down on the time it takes to find and ship each order, increasing customer satisfaction while reducing staff workload.
LSPs also use their industry networking to provide business owners with time-tested advice about logistics management, including how to arrange the inventory in the most cost-effective way. Many also handle payment collection for clients, which is a useful option for businesses that extend credit terms to their customers.
Optimal outgoing logistics involves shipping orders quickly and efficiently. For businesses that sell products and services online, every hour spent packaging and taking trips to the post office is an hour that can’t be spent creating more product or identifying areas for improvement.
Efficient outgoing logistics also includes reducing shipping rates, insurance costs and packing materials that chip away at profits. By partnering with an outbound logistics service provider, businesses can scale their operations to meet demand without the costs of hiring and training staff.
The three main services handled by logistics service providers are warehousing, freight shipping and courier services. Companies can choose to contract with one of these services separately or let their logistics service provider handle all three. The most common type of logistics service provider is a 3PL, which controls both inbound and outbound transportation and warehousing. There are also 2PLs, 4PLs and 5PLs, which offer a more consolidated supply chain management solution.
If your business is able to deliver one-of-a-kind products and experiences to customers, you may not need to partner with a logistics service provider. In fact, some smaller businesses prefer to handle all their shipping operations in-house, mainly because every hour spent on packing and sending orders is an hour not used to create more products or find areas for improvement.
However, if you have a large number of deliveries, or if your products are fragile and require special handling during shipment, a logistics service provider can be a lifesaver. In addition to providing warehousing, they can offer courier services to get your orders to their destination as quickly and reliably as possible.
These providers can also offer tracking updates to keep your customers updated about their orders’ status. This gives them peace of mind and increases customer satisfaction. In some cases, they can even help arrange return shipping for their customers.
The logistics of waste disposal and product destruction are complicated and could cost a company in the long run if not handled properly. By working with a 3PL service provider that offers these value-added services, you can take care of these logistical headaches and allow your employees to focus on ensuring that all aspects of business are running smoothly.
A logistics service provider can also offer a variety of recycling and disposal services. For example, freight international services Heritage Environmental Services can handle hazardous wastes and provides a range of truck, rail equipment and access to key Heritage-owned end disposal facilities across the country.
Similarly, ShipBob is a tech-savvy 3PL that specializes in reverse logistics for direct-to-consumer model eCommerce businesses. They can store returned products, recycle reusable packaging, and provide storage space for lease. They can even provide a full returns management system to customers. This helps them to recapture value from returning products and ensures that they are disposed of in an environmentally safe manner.